Finance Charge

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Finance Charge

The amount owed to a lender by a purchaser-debtor to be allowed to pay for goods purchased over a series of installments, as opposed to one lump sum at the time of the sale or billing.

A finance charge, sometimes called the cost of credit, is expressed as an annual interest rate levied upon the purchase price. It does not include any amounts that the lender might require for insurance premiums, delinquency charges, attorney's fees, court costs, collection expenses, or official fees that might be incurred should the debtor default in the repayment of the debt.

Federal and state "truth-in-lending" laws mandate that the complete cost of finance charges be fully disclosed on credit agreements and billing statements.

Cross-references

Consumer Credit Protection Act.

References in periodicals archive ?
A third major factor that differentiates credit card lending from other types of bank lending is that the interest earned on credit card balances is substantially less than the stated rate might suggest because convenience users (those who pay their balances in full each month) generate little or no revenue from finance charges.
This change will reduce the finance charges for consumers when they choose not to pay for a new purchase in full.
Please note that the customer had availed of a Balance Transfer Promotion with RAK Bank in April 2012 and had queries on the calculation of Finance Charges.
Furthermore, interest actually received on credit card balances is much less than the stated rate might indicate, because convenience users generate little or no revenue from finance charges.
In return, you pay a finance charge or "discount fee" on the total amount of the receivables--a process called factoring.
During such an amortization event, finance charge collections normally allocated to the seller will become available to cover trust expenses through a structural feature that fixes the finance charge allocation based upon pre-amortization invested amounts.
And while the Debt Indicator creates the added benefit of lowering finance charges on loan products, Jackson Hewitt customers receiving Refund Anticipation Loans (RAL) under $500 will pay no finance charges at all.
If you do not pay off the Special Purchase within 90 days, then deferred finance charges accrued on the Special Purchase balance from the date of purchase calculated at the Deferred/Accumulated Finance Charge Rate listed in your Credit Card Agreement will be assessed.
The net loss for this period, including non-cash finance charges, was $5,920,000 or $0.
6 million in avoided finance charges generated by SECU's SALO Loan Program plus the $8 million in SALO member savings is reinvested in North Carolina to help build families, educate children and buy homes.
Cardholders can avoid finance charges by paying the balances in full within the 25 day grace period.

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